Why I Would Recommend that Sonic Use Differentiation Strategy in Formulating the Overall Strategy - Assignment Example

Why I would recommend that Sonic use this strategy (differentiation) in formulating the overall strategy? In an industry which has wide scope and opportunities, it is very important that the firm must strive to have a definite and advantageous position within the industry. In a fiercely competitive industry the firm gains that position by leveraging its strengths. According to Michael Porter, the firms’ strengths can be broadly categorized into cost advantage and differentiation. Three types of generic strategies emerge when these strengths are applied by the firm: cost leadership, focus and differentiation (Porter). Cost leadership strategy provides the firm with distinct cost advantage against its rivals. The strategy revolves around selling price of the product or service in relation to that of other firms’ product costs. The market share is gained with lower price and is always targeted towards broader market segment. Focus strategy involves targeting specific market segment by fulfilling their requirement with better service. This strategy normally has high customer loyalty but narrow scope. Differentiation strategy is focused on providing unique features to its products with value added services that gives it an edge over its competitors. The firms which implement this market strategy have the enviable position of commanding premium prices for their product exclusivity. I would recommend that Sonic formulate a market strategy that includes differentiation and focus strategies. Differentiation strategy because Sonic is introducing a unique product called Sonic 1000 which is a multi functional state of the art technical gadget. It combines the features of many gizmos into one. In the business environment of globalization and need for optimal professional aptitude, it has become imperative that the professionals are not only accessible but it is also important that they have the advantage of instant access to information. Sonic 1000 is a product that combines the functions of a mobile phone and internet friendly advanced computer. Because of its unique characteristics, Sonic 1000 needs to be targeted at specific market segment comprising of upcoming young executives who work in a competitive atmosphere where slight edge can make all the difference. They require a small gadget which is multi functional and multi tasking thus eliminating the need to keep several gadgets like phone, laptop, digital diaries etc. It is therefore, necessary that the market strategy must be an amalgamation of differentiation and focus strategies for optimal advantage. What specific needs does the Sonic PDA address for each target? Sonic is an electronic firm that intends to establish an enviable position in the market. It has recently introduced a state of the art gizmo known as Sonic 1000 which packs the features of a laptop and phone into one small unit. Although the unit is broadly categorized under PDA (personalized digital assistant), it has wide ranging functions with multi tasking capabilities. We would be discussing its features while addressing the needs of the target group. Primary target group for Sonic 1000 are young professionals and entrepreneurs who need to establish their credibility in their respective fields. In the age of globalization, there is high degree of competitive rivalry among the firms which makes the jobs of the executives all the more challenging. It is important for the young professionals to remain a step ahead of their rival by not only providing unique products that they are endorsing but it is essential that they themselves are always accessible to their clients and customers. Apart from being accessible, the young executives need to be well informed and to keep the competitive edge over their competitors they must also have access to information and data, as and when required. Sonic 1000’s exclusive features make it an ideal gadget that would satisfy the requirements of this target group. Sonic 1000 is a small unit that can function like a 3G phone. Because of its 3G characteristics, it not only provides the audio communication but it can facilitate teleconferencing which has made communication across great distances much more interactive and impact oriented. For the high flying professionals, Sonic 1000 provides a means to exchange information and ideas in a more effective manner and making it more personalized. Sonic 1000 also performs all the tasks of a computer that includes storage and retrieval of large data while facilitating access to internet. Therefore, for the professionals who need to access data and information, at a moments notice, find Sonic 1000 extremely useful. Sonic 1000 would also target that class of students who are pursuing higher studies and require compact devices that are small enough to carry and powerful enough to be used as advanced computing device in their curricula. This multi dimensional gadget will also make it easier for the students to attend virtual workshops and interact with peers who may be at great distance. We can therefore conclude that the various value added services are sure to make Sonic 1000 a highly attractive and popular piece of gizmo for the professionals and businessmen. What 3 actions, found in the Levitt article, can Sonic do to keep from suffering Myopia? Marketing myopia was an article written by Theodore Levitt, then a Lecturer in Business Administration at the Harvard Business School. In the article, the author has emphasized that to maintain a sustainable growth in the industry or business environment, it is important that customers’ requirements and changing needs, be the focus of all marketing strategies. In fact the market strategies must become a priority for all types of industries in order to continue to grow. Often people are not able to see the wider implications and imaginative applications of the products and services. Their activities and focus areas are unfortunately, confined to specific product and ultimately lose out to more progressive competitor. As suggested in the article by Levitt, the first priority of Sonic would be the marketing strategy that would be customer oriented rather than product oriented. It is important to differentiate between selling and marketing. Sellers’ main concern is to convert products into cash. Whereas the marketing takes into account the preferences of the customers and thereby builds a solid customer loyalty that result in sustainable customer base that has potential for growth because it continues to satisfy the changing requirements of their needs. The second most important point that Levitt had made is that of population myth. According to him the belief that profits are assured by expanding and more affluent population is dear to the heart of every industry (Marketing myopia). It is true that an expanding market frequently makes the seller complacent and less imaginative. He gets trapped into the illusion of increasing profit with growing affluent population and commits the blunder of ignoring the fickle nature of the customers. Sonic intends to keep a watchful eye on the changing needs of the customers so that its products continue to meet the customers’ expectations and maintain an edge over their rivals. The third and probably the most relevant fact that Levitt emphasized in the article was that people label industries as growth industry or dying industry. There is no such thing as growth industry. There are companies organized and operated to create and capitalize growth opportunities (article). It is a mistake to think that a superior product would continue to sell in future also. Sonic will continue the research and development of its products as per the changing needs of the customers. We intend to follow Levitt’s advice that organization must learn to think of itself not as producing goods or services but as buying customers, as doing the things that would make people want to do business with it (article). Reference Levitt, Theodore.(1960). Marketing Myopia. Business Harvard School Review. Available: www.hbr.org Porter, Michael,E.(June 1, 1980). Competitive Strategy: Techniques for analyzing industries and competitors. NY: Free Press 1998 Read More